We continue our series on the top ten reasons to join the efforts of Compensation and Organization Development (OD) for greater organization effectiveness. I am not necessarily referencing a change in organization chart to have both disciplines report to the same manager (although I understand there have been a handful of cases where that has happened). Rather, Compensation and OD have complementary competencies that, when leveraged together, enable greater, more successfully adopted large-scale change to help move an organization forward. I am unpacking the top ten reasons Dr. Ed Lawler provided in his seminal work on the subject, Pay & Organization Development (Addison-Wesley, 1981). Reason #5: Pay Policy & Pay Practice are Malleable.According to Merriam-Webster, one of the definitions of malleable - best for this particular context of Compensation & OD synergy - is "having a capacity for adaptive change." Compensation strategies, design elements, pay practices, programs, and processes have nearly endless combinations to adapt to the business context - albeit constrained to some degree by legal and financial concerns. That may be hard to hear given the constraints and given the, "that's how we've always done it" corner into which we sometimes paint ourselves. Yet the truth is that, by and large, design elements within compensation initiatives can take many different forms.

Because of the breadth and depth of possibility with regard to reward programs, wisdom, discernment, and critical decision making with key stakeholders become all the more important. One of the ways in which OD practitioners bring great value is in their ability to help create the space and facilitate new conversations to allow for these issues and opportunities to surface in the midst of what can sometimes be challenging group dynamics. In addition, how rewards programs are designed and packaged can have a great deal of impact on culture, performance, and development - all areas of great concern and interest to those working in the OD discipline. A change in a reward program can have a profound impact on Organization Development efforts, past, present, and future.

"...how rewards programs are designed and packaged can have a great deal of impact on culture, performance, and development..."

Case in point: A large computer entertainment organization had found a great stride in its business strategy, customer loyalty, and value proposition to shareholders and employees alike. It was a very successful organization. One of the reasons for its success was taking full advantage of rewards initiatives to help steer the rudder in the direction the company wanted to go. Each year, key stakeholders would meet with HR, OD, and Compensation in a facilitated dialog to discuss The Next Big Thing (TNBT). While there were both long- and mid-term plans charting the course, TNBT would help guide the next twelve months resulting in the development of healthy performance goals and custom rewards programs.Cut to the chase: Each year, it was crystal clear where the emphasis had been placed. The organization was able to run analytics to show the gains in margin, cost management, new product offerings, inventory reduction - wherever leadership had pointed TNBT. They used the malleability of rewards programs in concert with getting the right people in the room to facilitate healthy dialog, to expertly steer the ship and its crew to their desired destination. And because OD now knew the future direction toward which behaviors would be pointed, they could craft their efforts to complement, rather than conflict with, the business strategy.How are you taking advantage of the malleability of rewards and the partnership with OD to help guide your organization in its desired direction?

Comments

Love the example and agree completely that adaptability with compensation programs is difficult but achievable. I actually was one of those HR leaders with responsibility for Compensation and OD, and at first the Comp group was scratching their heads trying to figure out what happened (it was an organization move to combine) but eventually we all came to see the significant synergies of the collaboration.

From my perspective the best opportunity to truly collaborate is in defining competencies and performance - that is the place where it all comes together for all aspects of HR....and for the business as a whole.

Great point, Carol, about defining competencies and performance. I think we can get so busy moving into action that we miss a key opportunity to define and clarify - as you say: for the business as a whole. So fun to hear you have a success story for leveraging the competencies of both important functions. Thank you for your comments.

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